NAMAS – A Promising Solution to the Climate Change Challenge

Not long ago, Nationally Appropriate Mitigation Actions (NAMAs) were little more than an obscure idea contained in a single sentence on an international climate change treaty document. Today, NAMAs are springing up around the globe as a promising solution to the climate change challenge thanks in large part to extensive efforts by groups like the Center for Clean Air Policy and its partners.

Few recognized the potential when NAMAs were first mentioned in the Bali Action Plan in December 2007. CCAP’s founding president, Ned Helme, saw in NAMAs a workable template that could advance global climate goals and at the same time spur economic development that would help people in developing countries over the long haul.

Today NAMAs have developed into sector wide programs that reduce greenhouse gas emissions while helping developing countries achieve sustainable development. Through these transformational programs in waste, transport, energy, and a range of other sectors, countries cut emissions while creating jobs, reducing poverty, and improving public health. They level the playing field for climate-friendly technologies to compete, making them pro-business while they produce real and lasting progress toward a global effort to prevent dangerous climate change.

NAMAs are tangible evidence that old views – that economic development and environmental integrity are necessarily a tradeoff – are out of date. They are the symbol of a new paradigm in which the trajectory for economic growth no longer means exponentially growing green- house gas emissions.

The Evolution of the NAMA Concept:

The seed for the NAMA concept was planted in the summer of 2007 at CCAP’s “Future Actions Dialogue.” At this dialogue which brought together a core group of climate negotiators from developing and developed countries, CCAP presented and circulated an original paper developed by a subgroup of developing country negotiators and CCAP, with ideas on possible developing country actions that could be supported by developed countries. The proposed concept was simple: developing countries would devise a locally effective way to reduce greenhouse gas emissions. Developed countries would provide some financing, and potentially other forms of support, to help bring these actions to fruition. The idea caught on, and developing country delegates pulled key concepts from this paper, and inserted the NAMA concept in the 2007 “Bali Action Plan,” agreed to that year in Indonesia at UN climate negotiations.

The work under the Bali Action Plan funneled into an international climate conference[1] in Copenhagen, Denmark in 2009, where countries were tasked with producing a global climate agreement to succeed the expiring Kyoto protocol. However, despite high expectations, international attention, and activism at “Hopenhagen,” what emerged from the negotiations was a disappointing and incomplete package that merely “took note” of a promising high level climate agreement between the US and the four largest developing country presidents. The following year at COP 16 in Cancun, the Mexican COP Presidency skillfully produced a comprehensive climate policy agreement that put the international climate negotiation process back on track. Most notably it included an international goal to mobilize USD 100 billion a year in climate finance from public and private sources by 2020.

The Copenhagen/Cancun outcomes made two things clear. First, the world was not ready for a new international, top-down climate agreement. Second, in the absence of such an agreement, we needed a model for effective, ambitious, bottom-up developing country action to reduce greenhouse gas emissions, to be supported by scaled-up financial commitments by developed countries.

It was in this context that CCAP established the Mitigation Action Implementation Network (MAIN). Starting with its first Latin American dialogue in March 2011 in San Jose, Costa Rica, this program brought together developing country policymakers, potential contributing countries, and subject matter experts, to share best practices on NAMAs across economic sectors – including energy, transport, waste, and industry – and discuss cross-cutting themes like climate finance. This dialogue was the first in a series of COP led meetings that would cover a range of critical issues in NAMA development, provide opportunities for developing countries to demonstrate progress in NAMA development to potential contributors and their peers, and allow countries to make connections and show that resources would be available to make NAMAs a reality. The MAIN countries (Latin America: Argentina, Chile, Colombia, Costa Rica, Panama, Peru, Uruguay; Asia: Indonesia, Malaysia, Pakistan, the Philippines, Thailand and Vietnam) are key middle-income countries, with growing emissions, and the capacity to make real change in their development pathways. MAIN has been a success – as of April 2015, CCAP had organized six MAIN dialogues in Latin America, and four in Asia, with high-level participation from developing countries, contributing countries, subject matter experts, and the private sector, improving understanding of key issues, leading to real action on greenhouse gas emissions and development on the ground, and spurring new climate finance for NAMAs. This program has been made possible through generous funding from the German International Climate Initiative, Environment Canada and the Kingdom of Denmark.

From Concept to Reality: Real World NAMAs:

In response to MAIN countries requests in these dialogues, CCAP experts have worked directly with developing countries in the development of specific NAMAs on the ground. In Colombia, for example, CCAP staff has worked with the country’s ministries of environment, housing and transport, and its national planning department, to address climate change emissions from personal vehicle use. The resulting transit-oriented-development (TOD) NAMA – which reduces the need to drive, and encourages public transportation use by supporting cities’ initiatives to drive housing and business development around mass transit hubs – enjoys broad and high-level political support in Colombia. The investments supported under this NAMA will save travelers time and money, span sustainable development and improve quality of life in urban neighborhoods. Governments and taxpayers will save money through reduced infrastructure costs, and private developers will find new investment opportunities (see CCAP’s Growing Wealthier) – all while reducing greenhouse gas emissions in the long run.

In Chile, CCAP helped the government develop a NAMA in the energy sector. The Andean nation faces the threat of a big expansion in new coal-burning power plants to meet growing demand for electricity. While the country has an abundance of wind and sun that can also be tapped, the deregulated Chilean power market is subject to wide fluctuations in its spot market price for electricity, ranging from as low as $30/MWh to nearly 10 times that price. Intermittent renewable energy projects that cannot obtain power purchase agreements thus face particular risks given this wide variation in price, making banks reluctant to invest. The Chilean Price Stabilization Fund (PSF) establishes a stable price for electricity produced by renewable sources, helping to attract financing from Chilean banks and international sources and move with confidence to clean energy.  This NAMA was so clearly a “win-win” that the Chilean government decided to unilaterally adopt it with domestic funds.

Over the course of MAIN dialogues, and through on-the-ground work, a set of four key elements for truly transformational NAMAs emerged: 1) NAMAs must be host-country driven; 2) they should strive to be sector-wide programs with a national scope; 3) they should include both policies and financial mechanisms to address the main barriers to mitigation activities; and 4) NAMAs  that seek international support should use that support to mobilize additional climate finance from bilateral institutions, international and domestic development banks and financial institutions, and the private sector. These elements are outlined in CCAP’s NAMA Opportunity Policy Brief.

In addition to CCAP’s direct assistance to developing countries, other international organizations have been stepping up to help build a significant pipeline of NAMAs.

Developing Critical Financing for NAMAs:

To make the NAMA concept work, two ingredients are critical: on one side you need a pipeline of strong proposals for transformational, cost-effective, sectoral actions in developing countries; on the other you need adequate and appropriate sources of financing. In May 2013, CCAP hosted the Global NAMA Financing Summit in Copenhagen, bringing together developing-country officials from Latin America and Asia with potential funding countries, development banks and financial institutions. High-level developing country officials presented NAMA proposals and received constructive feedback from potential funders. A number of senior officials from both developing and developed countries participated, including the Danish Minister for Climate, Energy, and Building, Pakistan’s Federal Secretary for Climate Change and vice ministers from Colombia, Costa Rica, and Uruguay. Referring to the fourteen NAMAs presented at the summit, John Morton, Chief of Staff of the United States Overseas Private Investment Corporation, noted that “It’s clear that these NAMAs are filled with bankable private sector investment opportunities.”

It was at the NAMA summit that the governments of the United Kingdom and Germany announced guidance for the first round of their joint NAMA Facility. While there were a number of institutions that worked in climate finance – government Overseas Development Assistance (ODA) programs, multilateral development banks, the Global Environment Facility (GEF), to name only a few – this path-breaking facility, initially announced at the Doha climate conference at the end of 2012, was the first to specifically focus on financing NAMAs. Throughout the development of this facility, CCAP provided input on its design and on the key aspects of NAMAs, which are reflected in the facility’s criteria for selecting NAMAs for financing.

With the developments of the last several years, what were once a few lines in a decision by a UN forum is now leading to progress on real, ambitious actions. In its first round of funding, the UK-Germany NAMA Facility selected the Colombia TOD NAMA, as well as NAMAs in Chile, Costa Rica, Mexico and Indonesia for funding. The facility has since completed a second call for proposals, preapproving four proposals, and has opened a third call. Additionally, since its inception, the donor base of the facility has broadened to include the kingdom of Denmark and the European Commission.

Expanding NAMAs in a Big Way through the GCF:

Going forward, to address the causes of climate change, financing for ambitious mitigation actions will need to be scaled up. Fortunately, the international community is responding, principally through the Green Climate Fund (GCF). Established at the 2010 climate conference in Cancun, the GCF received USD 10 billion in pledges from developed and developing countries for its first resource mobilization in 2014. The effective allocation of these funds has the potential to leverage billions more in investment from the private sector, multilateral development banks, and others. As the fund prepares to consider its first proposals, CCAP has leveraged its experience in development of transformational NAMAs, and engaged with the GCF board and secretariat to provide guidance on key elements, including selection criteria, the methodology for transparently evaluating proposals, the role of the private sector and the role of national governments in in developing transformational sector-wide NAMA proposals.

CCAP hopes to continue to point the way to the next phase of NAMA and GCF development. The new intended nationally determined contributions (INDCs) will be a key element in the new global climate agreement to be adopted in Paris in December of this year. The next challenge could well be to translate those largely quantitative goals into concrete NAMA proposals and integrated investment strategies that can be considered by the GCF for support.

NAMAs reduce the emission of pollutants that cause global warming while also promoting growth and improved health and quality of life for citizens. Not only do greenhouse gas emissions fall, but local people and businesses tangibly benefit. NAMA development has shown us that, with the right enabling environment, many of the opportunities to protect the planet are also great opportunities for the private sector, and society as a whole. Climate change has been called the world’s “greatest market failure.” With the right policies, CCAP is confident that NAMAs can turn solving climate change into real world WIN-WIN opportunities.


 

[1] The fifteenth “Conference of the Parties” (COP 15) to the United Nations Framework Convention on Climate Change (UNFCCC)